Example: oil/ore tanker operator Frontline Ltd. Today, it got an upgrade from "Underperform" to "Market Perform" by an analyst at FBR Capital. If this news helped the stock, it didn't help much: Frontline lost 4.26% to close at $22.27.
Of course, the upgrade wasn't much of one. The analyst said that Frontline is no longer squeezed for cash, and its "above-average day rates" are making the company's prospects look less doleful. The old target for the stock was $14, and the new target is $23 - only slightly above where Frontline stock ended up.
Still, it shows that upgrades don't always have the potency sometimes ascribed to them. That's good in a way, because an immediately ineffectual upgrade gives people time to act on it without chasing a mini-bubble. It's kind of hard of traders, though.
Buffett's annual letter
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